Consolidating debt can be a good idea, but keep in mind how credit bureaus determine your credit score. If you have two credit cards, each with balances below 30 percent of your credit limit, the credit bureaus consider that a plus. If you consolidate your cards, and now have a single card with a balance of more than 30 percent of your limit, the credit bureaus may lower your credit score. There are a couple of ways to consolidate cards, but the best approach is to get a third card with a balance transfer capability, then use it to pay off the other two cards.

Step 1

Apply for a credit card from a third company. Contact more than one company to find the best interest rate with a card that includes a balance transfer offer. In many cases, the balance transfer has an introductory interest rate of 0.0 percent for a number of months. Make sure the new company allows transfer balances from more than one credit card.

Step 2

Complete the balance transfers. When you receive your new card, note how long you have to complete the transfers. In most cases, the balance transfer offer is only good for a limited time, often for no more than a month.

Step 3

When you receive statements from the two companies you're paying off, there will probably be some small residual balances. Pay these off. Unless canceling the cards brings your credit card debt-to-available credit ratio above 30 percent, it's a good idea to make these final pay-offs by phone and to cancel the cards at the same time. Open credit cards with zero balances won't lower your credit score, but they can be a temptation to over-spend.